Corporate governance in Adelphia Communications Corp., US Term Paper

Corporate governance in Adelphia Communications Corp., US - Term Paper ExampleIn the United States, checks and balances prevent any furcate from accumulating too much power, then encouraging cooperation. According to Kroszner (Para. 9), good corporate governance requires strong executives with an unaffiliated mind. Moreover, the Sarbanes Oxley Act of 2002 applies to all organizations and it entails the requirements for the governance of organizations. The Act requires that management of an organization should certify a companys financial reports and internal controls too. Despite the United States corporate governance being heavily criticized for the failure of nearly of major companies like Tyco and WorldCom, the country has improved on its Sarbanes Oxley Act of 2002. The SarbanesOxley Act promotes accuracy and accessibility of information, whereby investors ar required to reveal the companys doing. The Act also involves penalties for those violating regulations for instance, a maximum of 20 old age in prison for maneuver rather than a five-year sentence. Corporate governance entails the controlling and directing of companies in a direction of fairness, accountability, and transparency. Below are checks and balances within the corporate governance of the United States. ... ct fosters the ruler of accuracy and accessibility whereby, it requires the revealing of companys stock after the second day of transaction by its directors and principal investors. This fast revelation of the companys stock makes it easier for the outsiders interested in the company. ill luck to abide by the laws of this Act a person is liable to 20 years of imprisonment. This act is pay backed at creating quality standards for corporate governance, which managers and auditors must abide by. Management accountability The Sarbanes Oxley Act fosters management accountability, hence preventing issues of fraud and the blame game. A corporate fraud task force was established in 2002 w ith an aim of keep back fraud in organizations. Accordingly, the managing directors and officers must certify the accuracy of their companys financial reports. The Act requires a total of $1million for any officers who knowingly engage in false certification of financial reports. Auditor license Auditors are limited to false and careless financial reports. However, this Act makes it difficult for managers to select and compensate an orthogonal auditor. The choice of an auditor is now made by the committee of independent directors who are not employees of the organization, hence being not related to the company. A new audit partner is required to be designate to each client account. In addition, the government has formed the Public Company Accounting Oversight Board, with an aim of monitoring and enforcing the supply of audit services. Moreover, accounting firms are required to register with the oversight board, submit their casual performances, and abide to the rules and regula tions of the board (Kroszner (Para. 20). The Sarbanes Oxley Act ensures that rules are followed to the